The G20 wants to stop climate change – but who on earth will pay for it?
As finance ministers meet in St Andrews, Sean O'Grady looks at prospects for progress
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Independent Minds
As if they hadn't got quite enough on their plates already, the finance ministers of the G20, meeting in St Andrews, have also set themselves the task of saving the planet. Strange, but true. Even the clever people at HM Treasury may be feeling the strain.
The Chancellor, Alistair Darling, was honest enough yesterday to admit that "heavy lifting" is needed to make progress on the climate change issue: "My message to my fellow finance ministers is there's a job of work to be done here. I don't think anyone seriously denies there's a problem here. Let's get on with it."
What they need to get on with is an agreement on "climate finance" – how much the developed world needs to give to the developing world to help them to deliver economic expansion without the same sort of pollution we inflicted on the earth during our industrial revolution. There is also a demand for funds to help nations where climate change has probably already gone too far to correct, and where it is threatening environments or their very existence. The case of the Maldives, threatened with being submerged completely by rising sea levels, is the most striking; the 150 million population of Bangladesh at risk from incessant flooding is the most important, and perplexing.
These talks come against a background of rising criticisms of the central mechanism chosen to transfer funds from the rich to the poor worlds: carbon trading. Last week a Friends of the Earth report warned that carbon trading could be developing into a speculative bubble, and that complex derivative instruments were being bundled and sold as mortgage-backed securities were in the housing bubble. The author, Sarah-Jayne Clifton, wrote: "Similarly complex instruments are already being used in the carbon markets. For example, offset aggregators are bundling small offset projects for buyers, increasingly the likelihood of similar challenges to accurate valuation of assets as the carbon markets grow." A case for the Bank of England, perhaps.
The idea this weekend is that the finance ministers, representing as they do some 90 per cent of global GDP, will make a powerful contribution to the UN Climate Change Conference in Copenhagen next month, helping those troubled discussions to come to something like an accord, and not ending up deadlocked like the Doha round of world trade talks, which have been dragging on since 2001.
Writing in The Independent yesterday, Mr Darling reflected the difficult atmosphere inside the conference rooms: "The barriers to agreement on climate finance remain substantial. Even if countries agree the levels of finance, few will want to hand over money if they lack confidence in the means of delivering it."
The immediate task facing Mr Darling and his colleagues is to agree how much money will be transferred from developed to developing nations. The sums are substantial, though not quite on the scale of the banking bailouts. British officials say that poorer countries will need at least £100bn a year by 2020 to cut emissions and adapt to climate change, of which about half would be public money, while the UN estimates go as high as £400bn.
There are at least three obstacles to agreement on this.
First, there is reluctance on the part of some nations to be tied down to specifics. The EU, for example, is not very specific about how much it is going to commit itself, merely saying that it will pay its "fair share", and the UK has only agreed to provide about £1bn a year as part of that Eu funding. The failure of the EU to give a lead on this is pretty disappointing to many activists. Japan, too, is said to be wary of concrete figures. Such vagueness obviously does little to make these financial targets stick.
Second, there are growing doubts about whether the money that is being transferred even now is being wisely used – "governance" issues. There are well-documented cases, from the Bolivian rainforest to Chinese fridge factories, of fraud and abuse of climate trading systems, the Clean Development Mechanism and public funds more generally. The issue here is often "additionality"; if a developing nation is given financial help to build, say, a wind farm, the question arises as to whether they would have built the wind farm in any case, or whether the money spent on that particular green project was the most efficient use of those scarce funds. It is a particularly acute case of the "free rider" problem.
Third is the effectiveness of the system of carbon trading itself. The principle is simple: nations and companies that pollute more than a given cap on carbon dioxide and other emissions have to buy "credits" from their cleaner counterparts who have seen the opportunity to reduce emissions to below their quota and can then sell the resulting credits on the European Climate Exchange in London. Thus carbon has a market price attached to it – incentives and penalties to send signals about energy use.
One obvious objection comes if the caps are too generous. And even if they are strict, if nations choose to pay a premium to pollute, then they are still polluting; the "externalities", the wider costs to the environment, are still not properly reflected in the price of carbon.
Second, the system is hardly universal. The US is now seeking to build its own parallel system of carbon trading, though with the aim that the carbon credits it creates can be used on other exchanges around the world – "fungibility", meaning that one currency is easily converted into another. Ironically it was the US that insisted on carbon trading as a condition for their signing up to Kyoto: otherwise a simpler international carbon tax or just strict quotas would have been the preferred mechanism, though both of those might have provoked much political resistance. Carbon trading does have the advantage of being remote from voters.
Whatever happens at St Andrews, there will be far-reaching consequences, for the economy and the environment. The experience of Doha and Kyoto suggests that the heavy lifting won't be finished off at St Andrews.
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Comments
as is the Cap and Trade system,
whether one is for or against emission control
This has USA as example, but is obviously applicable elsewhere too
The issues are emission reduction and future energy supply.
Given the uncertainty of the effects of emission reduction on global
temperature - and given the expense of emission reduction - the key is
to engage in activites which
1. Are valuable in themselves.
2. Meet emission reduction targets with minimal business disruption and expense.
Sufficient first phase 2020/2030 emission reduction, for 2020
typically quoted at 15-20% reduction, is achieved by acting on
electricity generation (coal, gas) and transport (mainly automobiles)
alone, since these 2 sectors account for nearly 80% of CO2 emissions.
This can be done with emission tax (for cars, allowing free choice)
and emission limits for CO2 (for electricity generation), without any emission trading.
The focus on electricity and transport gives several advantages:
1. Local environmental benefit from less pollution of sulphur and all
else that's in the emissions, regardless of the less certain or
immediate global benefit from CO2 reduction.
2. Electricity supply alternatives which together with improved grid
distribution gives better competition and keeps down electricity bills
for consumers.
3. Transport alternatives (using electricity, hydrogen and other
energy sources), which give variety of choice and competition
advantages for consumers, additionally reducing the dependency on oil imports.
4. No trade problems: Unlike Cap and Trade, which involves cement,
steel and other industries having to face imports from unregulated
countries, the here suggested electricity and transport changes are
not just more limited, but also largely local.
In 2020 (and again 2030), from then available evidence, either
1. There is increasing consensus that reduction attempts have no
value: In that case little has been lost, since the described changes
in electricity and transport industry carry their own benefit, or
2. Consensus remains that CO2 emission reduction should continue, in which case America is on track,
and may continue with more specific emission reduction efforts towards 2050 that extend electricity and transport measures,
and can involve other industries if necessary.
Funding and Impact
Equity and long term loan finance can be used: Long term industrial
loans from financial institutions, particularly if federal/state
guaranteed, give low yearly interest repayments and lessen the effect
on electricity bills or transport cost.
The impact on the businesses is further lessened by the stability and
predictability surrounding the funding.
Since only electricity and transport are involved, other business
continues as usual and consumers and society in general are spared
expense and disruption.
This is even more obvious from having no energy efficiency regulation either.
Compare with
today’s all-encompassing Cap and Trade (emission trading) suggestions,
with unpredictability, expense, and needless disruption from normal
business practice on one hand, or unnecessary profiteering from free
allowance handouts with little actual emission reduction on the other
hand, together with extensive energy efficiency regulation on what
people can or can’t buy and use.
----------------------------------------
Emission Policy Alternatives
http://ceolas.net/#cce1x
Introduction: The need - or not - to deal with emissions
The Overall Picture
Emission sources, land and ocean cycles, agriculture and deforestation
1. Direct Industrial Emission Regulation
Mandated reduction of CO2, monitored like other emission substances
2. Carbon Taxation
Fuel Tax -- Emission Tax
3. Emission Trading (Cap and Trade)
Basic Idea -- Offsets -- Tree Planting -- Manufacture Shift -- Fair
Trade -- Surreal Market -- Allowances: Auctions + Hand-Outs --
Allowance Trading -- Companies: Business Stability + Cost -- In
Conclusion
4. Contracted CO2 Reduction
Private companies compete for contracts to lower CO2 emissions
.
The answer: Hemp. Yes, the Cannabis plant. Whilst Cannabis Sativa is best used for industry, Cannabis Indica (The one grown for the drug) is also usable.
Hemp fibre used to be used to produce paper, until production from trees was found to be cheaper. However, Hemp is an annual plant and therefore we aren't cutting down trees that will take hundreds of years to grow.
Hemp can be used as an alternative fuel to Petrol and Diesel. It produces little CO2 and of course whilst growing uses a lot of CO2 during photosynthesis.
It can also be used as an alternative source of energy so no fossil fuels are being burnt, producing CO2.
Hemp seeds have most of the essential nutrients and fatty acids required in a Human diet and therefore is a cheap source of food for developing countries in a famine. This is exactly what Hemp seeds were used for during famines in the far east thousands of years ago.
The Hemp plant is highly adapted. It needs little pesticide and herbicide: It produces THC, it's own pesticide and due to the nature of it's growth covers most of the immediately surrounding area in shade, preventing plant growth.
It's roots are long and strong, so it is great for improving the quality of soil and it also means that Hemp can grow in almost any soil condition, where many plant's can not grow.
I got this information from: http://www.jackherer.com/chapter02.h
It's an online version of a book published many years ago and since updated 16 times, it has a claim at the top of the link and challenges you to prove it wrong with a 100,000 US$ reward for doing so. In essence, the author, Jack Herer, is so confident in those claims that he doesn't believe it will be ever proven wrong, hence the challenge.
So if he is indeed correct, why must politicians argue over how to reverse climate change when the answer is right under their noses?
I also recommend the other chapters, it's a very interesting read!
"Oh", said the mayor, "The problem is that the contractors are paid to dig out the drainage channels. They take the money but never do the work."
My current offer on climate change compensation is this - not one brass farthing. If we entered into fair trading arrangements developing governments could pay for everything that they need - including repairing drainage ditches. Giving charity to governments that are already corrupt is ridiculous. This is my money that we are talking about, it's not Gordon Brown's for him to spread around as he sees fit.
1) CO2 levels set for some distant date in the future, such as 2050, when most of the people setting this date will be long gone.
2) An enormous figure set such as as 500bn euros, with the nations who set this figure spending the next 50 years finding ways to get out of raising the money.
3) The developing countries arguing that it's nothing to do with them and they need to pollute more to develop their economies.
4) More carbon trading systems put in place, in which I can fly around the world and offset my footprint via Rocks, when the end result was that Earth experienced greater CO2.
etc, etc, etc.
However, we can rely on one thing - for the politicians to make a complete dogs dinner of it.
You will see that the total USA + EU CO2 emissions between 1970 and 2006 have risen from 1.8 GT to around 2.2 GT. However the global total has risen from 4.0 GT to around 8.2 GT and shows no sign of even flattening. In other words the USA + EU emissions have gone from around one half to around a quarter. So even if we and the US accept drastic cuts it will make absolutely no real difference to the total.
Clearly the G20 are most unlikely to persuade the developing countries to change their ways so we had better hope we will be able to adapt to higher temperarures.
When will our politicians stop worrying about an extremely expensive non problem?
Economic growth and reduced emissions are mutually exclusive concepts. Any sensible thirteen-year -old can work that out.
All official policy is drivel, desigjed to mislead and confuse, while the money lenders continue to reap their harvests.
"Unrestricted growth for it's own sake is the ideology of the cancer cell"
Here's a novel concept. How about offsetting growth in the third world by equivalent reduction in the GDP of the developed countries. Ultimately there must be equity in the subsistance standards of all people. Once that's achieved then by all means look at raising everybody's standards of living in a sustainable way. Let's give up our jet travel, cars, exoctic year-round foods and technology addiction. It's not the ideology of Pol Pot, trying to revert to a medieval fuedal society, It's common sense. Consumerism and the accumulation and concentration of weatlth is what's killing the planet.
Bottom line, it's my children's planet, not the global elite's. Ultimately consumerist capitalism must fail, let's make it sooner rather than later, for the sake of tomorrow's generations...
So no change in the double-think, then!